Questions had arisen about Madam Chung's faculties as she was diagnosed with dementia this year, but a Family Court ruled yesterday that the 87-year-old was mentally capable of deciding who should look after her welfare and assets worth about $40 million (S$52 million).

Yang, 40, met Madam Chung in Beijing in 2008 and moved to Singapore to live in her home the following year.

The widow's niece, Hedy Mok, 60, accused him of manipulating her aunt for her assets, which include a $30 million bungalow.

Madam Mok has also sued him in the High Court for abusing his powers as Madam Chung's guardian under the LPA and is seeking damages.

Two months ago, the widow's lawyers filed an application to cancel Yang's LPA, after private psychiatrist Calvin Fones certified that she had the mental capacity to do so.

Tussle over widow's $40m assets turns ugly

But the OPG applied to court to have a separate medical expert, Institute of Mental Health senior consultant Chiam Peak Chiang, examine Madam Chung as well, calling the move "necessary to safeguard and protect the interests and assets of Madam Chung".

A closed-door hearing ensued, during which both doctors were called by the court as expert witnesses, culminating in yesterday's ruling.

"Now that the court has determined Madam Chung's capacity to revoke her LPA, the Public Guardian will process her application to cancel her LPA from the register," an OPG spokesman later said.

Speaking to The Straits Times, Madam Mok said she and her aunt were delighted with the outcome.

"She's smiling and happy that the LPA can be revoked, finally," said the niece. "I'm relieved that we can move on and put things right for my aunt's future."

Madam Mok's lawyer, Peter Doraisamy from Selvam LLC, said his team would continue with their application to appoint his client as a deputy empowered to make decisions on behalf of Madam Chung under the Mental Capacity Act.

Yang's lawyers declined to let on if they would be appealing against the Family Court's decision, saying only that they would "review all options".

Meanwhile, the former tour guide is on police remand after being charged with faking 331 receipts. These were supposedly paid to Young Music and Dance Studio, of which he was a director.

He is also being probed by the Ministry of Manpower and Immigration and Checkpoints Authority over his Employment Pass, obtained in 2009, and permanent residency in 2011.